Welfare reform priority for English

Mr English believed the recent rise in unemployment numbers was because of work-testing requirements. Photo / Greg Bowker

Finance Minister Bill English says one of his main priorities in 2013 will be "to bed in" welfare reforms.

Another will be to intensively manage the $1 billion savings required of the public service over three years, which began on July 1, 2012.

The third will be to keep the public service focused on results, the targets for which have been spelled out under the umbrella of Better Public Service Results Targets.

"Saving is one thing but actually what matters is delivering results and that is going to get more robust," Mr English told the Herald.

Asked what his 2013 goals would be in terms of the ongoing public sector reform he has driven, Mr English said the broad aim for this year was to bed in the welfare reforms "because that is where by far the biggest fiscal benefits lie".

The Treasury and the Ministry of Social Development have estimated that the number of beneficiaries could be cut from between 28,000 and 44,000 by 2016-17, saving between $992 million and $1.6 billion.

A June Cabinet paper released by the Treasury on December 19 said the variation around the impacts was due to uncertainty of implementation, changes to delivery and eventual design details.

The Government spends $8 billion a year on welfare benefits.

Social Development Minister Paula Bennett said in September that an actuarial valuation based on the expected duration of all current beneficiaries showed the lifetime costs to be $78 billion.

Mr English said small decisions made in the short term made a big long-term difference to costs.

"In terms of the Government's focus on those long-term costs, the welfare reforms are the biggest single effort there."

Work-testing has been introduced for domestic purposes beneficiaries, as have a raft of new obligations and management of benefits for youth and teenage parents.

Further reforms are in legislation before the social services committee that simplify the benefit system from seven to three: jobseeker support, sole parent support for parents with children under 14, and supporting living payment for people significantly restricted by sickness.

The bill also requires jobseekers to be drug-free, and requires beneficiaries with children to immunise them and have toddlers enrolled in early childhood education.

Mr English believed the recent rise in unemployment numbers was because of work-testing requirements.

"There's actually quite a few people who now are available for work who weren't."

That is in line with the same Cabinet paper which said more people actively looking for work would increase the labour force participation rate and temporarily raise the unemployment rate.

Mr English also pointed to a reduction in numbers on the domestic purposes benefit from 114,147 in September 2011 to 110,738 in September 2012 - although the new work-testing rules (being available for part-time work when the youngest child is 5 and full-time work when the youngest child is 14) did not take effect until October 2012.

The $1 billion saving Mr English referred to as a priority was signalled in the 2011 Budget where state agencies will be required to fund the employer contributions to KiwiSaver, the State Sector Retirement Scheme and the Teachers' Retirement Scheme, saving $650 million over three years, and a further $330 million is being sought.

"The pressure is growing on them to rethink how they do business and some have managed that and some haven't.

"Defence have managed it, ACC have managed it," Mr English said.

The third goal, to bed in the results-based approach, was well underway.

"The great thing is we are not spending any time sitting around trying to work out what to do."

When Governments sat around wondering what to do next they became becalmed, he said.

"These people are totally focused because they know what they are meant to be aiming at."

The Government has set tangible targets to be achieved such as cutting recidivism by 25 per cent by 2017 or increasing the number of students passing NCEA level 2 from 67 per cent in 2010 to 85 per cent in 2017.

He said the public sector now knew that the the four-year budget plans had to reflect changes driven by the (focus on) results.

It was no longer the usual model of the Government wanting something done so it bought it at the margin with a new programme.

"Education is a classic where you have got to say: 'No, if it is not about achievement, we don't want it.' Getting to NCEA level 2 is not about a $10 million programme at the margin to get 85 per cent of kids over the line."

That is what they were paid to do. The first $10 billion was not for showing up. The first $10 billion was actually for getting kids over the line.

His message to the education sector was: "Don't come asking for more money for more programmes because they've already got hundreds of millions.

"If it's for professional development, is it professional development that is going to get 14-year-old kids learning so they can get NCEA level 2?

"Or is it afternoon teas down at the Holiday Inn talking about how they don't like the Ministry of Education?"